Management of the bank's profit

Profit is the main goal of the banks. It provides the formation of funds and reserves for loss contingencies that are possible in banking, stimulates the activity of management personnel to improve the operation of the bank, reducing costs and improving competitiveness. Its effective management involves the construction of a profit at the bank of the organizational and methodological support systems of management, basic knowledge of the mechanisms of profits, use of modern methods of analysis and planning. Considering the nature of profit, it should be noted following its performance. First of all, profit is a form of income entrepreneur, performing a certain activity. This external, the easiest form of expression is arrived at the same time insufficient for its full characterization, since in some cases, active work in any field may not be profit-related. Second, the profit - a form of income of an entrepreneur who has invested his capital in order to achieve a particular commercial success. Category profits is inextricably linked with the category of capital - special factor of production - and in the average price of a characteristic operating capital. Another characteristic of the profits is that it is not a guaranteed income of an entrepreneur who has invested his capital in one or another kind of business, and is the result of a skillful and successful in this business. However, in the process of doing business entrepreneur because of its failed action or objective reasons, the external nature may not only be deprived of anticipated profits, but lose all or part of the invested capital. Therefore, profit is a part of and payment for the risk of doing business (income level and the level of business risk are directly proportional). Category: Management Operations Commercial Bank